Boomerang Revenue, Valuation & Funding (2024)

hi everybody my name is a mo uh I go by my last name MO is a Burmese name and there's a whole different story on why we don't have a paternal last name system um I'm going to talk about well before we talk about what we're going to talk about I'll tell you what Boomerang is we're the OG of the email productivity category we invented the snooze button you now see in Gmail outl superhuman even slack it's a free meaness product that allows you to manage your inbox followups and meeting scheduling and we've been doing the plg route before it even had a name and at the beginning of this year we decided that 2024 is going to be the year of experiments so far this this year we have executed 44 experiments about one experiment a week about that pace a little bit more they arrang from marketing product Improvement product virality building practices and a few more and these experiments resulted in about 500k of ARR 6% of our total revenue and over the next 20 minutes I'm going to talk about the three most interesting tests that we run our a journey to boostrapping to 8 million and what's the benefit of choosing to run the company that way so the first one that I pick was because it's the highest impact in terms of Revenue we are a Freeman SAS so as a Freeman company many of our trials will convert to free basic user at the end of the trial and this is just part of the funnel that we initially didn't spend too much time optimizing because our free- topay conversion was pretty good compared to the Benchmark so we kind of neglected it over the year and when we were kind of looking at what experiments to start it seems like a very good high impact with low effort ratio to start and over the four experiments so it was you know four iterative experiments we got about 250k worth of asan new subscriber from free users converting to pay and it's really kind of stupid simple right we have this Blue Link we're asking them to buy a subscription we just switch it to the red button and at some point our team was joking that should we rename the year of experiment to the year of big red buttons so if you're on a marketing team or a Founder with a marketing team you go back and ask them have you try a red button um the next one is it's the easiest experiment you can do no code require a marketing team a marketing person a Founder can do it in one day but before I do that I want to ask does everybody know what Dunning emails are no okay so in a in a recurring subscription business we have to charge them at the time of renewal and for various reason credit card bank account any kind of technical anomalies some of those payments will not go through and they are called involuntary churn and you want to really reduce involuntary churn because these customers are already paying for it they love your product they already using it they don't want to leave so why would you let them go right and as we have tons of thousands of individual subscriber for us it's a great Roi to work on this part uh examples of Dunning emails are one of for B2B slack is your payment information up to date because something didn't go through the one on the right is the Amazon b2c email they are about violating the red button rules here um so all we did was at three arra email email that extended the time period from 13 days to 21 days and added the three extra email in the middle and I swear I'm not talking about three extra email for every single experiment but somehow that's what happened the rules are you going to increase urgency as you write the email the one really little known fact is you don't want to send those email on the same weekday is there's a really weird quirky thing with bank account and credit cards sometimes you're like oh I'll just send you know every seven days a reminder to update your payment bad idea you want to vary the Cadence between the three five seven so that you are not dropping on the same weekday you want a clear CTA again ideally a red button so we put three red button in the middle and people are afraid of losing what they already have so if you PR like basically point out what they are going to lose by not going and fixing this payment problem that usually convert better and I really don't think I need to say this right remain polite and professional I have gotten some businesses getting more desperate car salesmen tected of like you got to do this now with the you know red exclamation point you don't need to do that you can be polite professional and cous and that works a lot better if you have B2B subscriber by invoices you it's still the same thing there are some reason the invoices are not going through you want to recover that you can still do that so what's the results our recovery rate went up 12% that's like a big boost in retention these subscribers are subscribers they already use love your product don't you want to retain 12% more every single a month and we went from 29 percentile in our industry in our ticket side this is from rarly so they have a benchmark for everybody who uses Rari to 52nd percentile in the industry so we went up quite a bit right bought and third to slightly above average but that means we still have room to grow so we intend to add a couple more rounds of experiments in the same vein uh before uhoh ACC all right uh can okay let me see talk through it okay okay before I talk about the next experiment most people don't know Boomerang now offers a fully integrated meeting scheduling built into your email and Rajesh talk about how important amp and interactivity in email is and how it reduces the clip through friction right what we are doing is a live image in your email of your calendar right in there and it will update real time with your availability as it go by and it works across all clients not just in Gmail not just in uh Yahoo mail everything that email client that can display image our technology works so we we wanted to do uh so to talk about this experiment at end understanding you need to know that we actually do meeting scheduling so when Boomerang users are sending out meetings the guests are clicking through so the in email image they are clicking through they got here their confirmation so this is the virality of our product right if you have one Boomerang user sending out 100 meetings they are 100 people coming across Boomerang experience and the pitch is very simple you just had a great meeting scheduling experience don't you want that for yourself if you if we improve this from whatever the current conversion is to a little bit better the virality is keeps improving 100 people come across two of them convert we have two new user for free then those two people send out another 100 messages you get another two users for free it goes in on so we have a very good hypothesis it's a high leverage page and the designers are like let's put more value prop right explain so the first the one on the top is the control and the variant a and variant B so Pop Quiz anybody wants to take a guess on which variant one B why image images are convincing that was a trick question both variants lost to control so what do you do right you have a great hypothesis great theory on why this should work you go the opposite direction we took out all the bright color buttons branding is gone no marketing info we kept the original oneline schedule meetings with Boomerang and it w up from 1% to basically 20 blend it across maybe like 14% because we have less Outlook users in general so what I'm trying to say is sometimes you would have a hypothesis very convinced it will win one it's lost do you throw it up and just say done this was a bad idea I was around no you can try go going the completely radical opposite direction and see how it works and what I want you to take away from this is not hey go try a minimalist page design I don't know your customer I don't know your industry I don't know your product what you have to take away is when something doesn't go the way you expect it your original thesis is not proven try a different way and be happy to eat the Humble Pie right the point point of the experiment is not to prove you right you're right it's about finding the truth and it's really a great experience for getting the team aligned in the same direction if you have a designer they hate this they are like why would this win right and what you want for a team is your team to not have the attitude of everybody trying to prove themselves right and trying to prove their my fathers this is good you want everybody completely ly on every experiment regardless of Whose idea it is you want the team completely aligned to win or lose and losing is fine right if the experiment fail you learn something the point of experiment is again to find the truth and from those 44 experiments in eight months we learn a few lessons we have 19 cesses those are now part of the product making this extra 500k of ARR 10 failures that we learn some of them are like there's no way this can lose and they did and 15 currently in flight and to make our original go of 52 experiment in a year we have eight more to go um from the lesson second order effect is really subtle and I have this Horror Story of one of the experiment if you look at in isolation it was a winner we put a download button on our one of the help tutorial page from the conversion it looked great it was a very good hight trffic organic SEO tutorial page with no conversion button at the beginning we added a conversion button we got new free extra installs then Google started penalizing us because we have a button so then all our organic ASO traffic went away so it went from a page with loss of traffic no conversion to page with traffic with a conversion button and then the page that didn't get traffic anymore so we are trying to basically get our GI back out of that trouble right but it's not like a one of the major pages but we sometimes you don't always think of all the second order effect that can come through and it's really important to make sure what are your God real metrics and make sure that you are looking out for them no peaking should be self-explanatory it's rational when you're when the experiments in Flight don't look ahead and react or change things but it's really hard to have self-control rationally we know that but then when it's actually there everybody want to peek uh somebody from my team is here they have done it too um so the other one is Big swings like the biggest effort don't necessarily bring the largest results our most ambitious experiments where we changed how a product work at a one funnel step in a major way did it really bring the most valuable results to the company the gains was Tiny incremental and we just like we spent you know two and a half month building something and it didn't even bring the same results as putting a big red button somewhere so sometime just adding a red button might give you a extra 7% in conversion and I want to put a note on how to start this experimental culture I want to know I want to do a quick poll on where you are you are all well optimized across the entire funnel you don't need to optimize anymore that's a anybody on a stage no so nobody gets a goal star B too many ideas to start you have you know a kind of working funnel and everybody has ideas on how to fix something how to change something or you're just starting out and nothing is quite optimized yet all of those are hard to know where to start CU you have 200 ideas you have a small team you need to execute so I have product background as a Founder so you go back to the rice framework everybody amiliar with rice framework should I get into it so risk impact confidence and effort and there's a reason the confidence is strike through on the spreadsheet so this is our real life experiment prioritization framework and we put all the things and then when we look at the confidence we're like but why would we estimate the confidence if we're so sure this is going to work you just do it the whole point of experiments is you don't know what will work so confidence doesn't really matter what you think but the C actually is complexity and it's kind of subtle difference between complexity and effort they are very high effort experiments that are quite simple to run you just have a very clean two cohort run it versus there are something that's like a small simple change but the cohort setup can be very complicated or very easy to mess up so one thing we learned in the experimentation framework that we pick up is take rice but c is now instead of confidence it's complexity and the ey is really tall I wanted to get this visual in your mind and bring it home because impact basically beats everything else if you have a high impact results or or hypothesis that you can know that can bring you a very high leverage thing start there one impact being equal you can kind of you know figure out what's easy what's risky and then the risk part if you're starting out you don't have that many customer you don't have that many Revenue don't worry about it for us it does matter because we have you know tons of thousands of customer subscribers millions of users and several millions of AR to protect so we needed the gut real and really estimating the risk this is our experiment dashboard I happy to share this with folks uh is one through about four to five iteration as we go through templex and checklist to retain the learning from every mistake that you make trust me you'll make it regardless of how much like preparation and thinking through and planning you'll still make mistakes once you run we actually have a proposal template anyone can propose the experiment if they write up the proposal and if that proposal is green lit they become the owner of the the experiment and move it through the whole life cycle so from the time that I said hey this is the year experiment to the time that our first experiment went live it was two weeks and our core experiment team is only five people we didn't spend any money on any fancy AB testing framework if you have a product like that please don't come pitch me so I don't have to tell no to my team why why and how can we move this fast at a 14-year-old company with millions of users and millions of Revenue I want to go back to zoom back out a little bit and talk about our company history we started back in 2010 three Engineers firsttime founders with no money we were actually at the stage where we were putting our moving expenses on credit card we came out to California and raised our first 400 okay and then we somehow got to profitability within about 18 months and mainly because we were very lean it was you know that 400k gave us three founders one employee one contractors and it lasted about 18 months and we never raise again we have grown to 8 million in ARR with our own Revenue being profitable every single year since about 2012 so our like the the ratio that I love that most people don't give enough credit for software Founders is we have turned every single dollar of investment into about $125 in Revenue to date and it's now cool to be profitable cash flow positive post zero interest rate error but it wasn't popular or cool back then right I we we were the OG of like 2010 era where everybody was raising money spending money you know growth above anything else and our team was actually in the habit of making more Revenue than we said and we are pretty out there in our fanatical focus on keeping everything lean and simple so when I talk to Founders they asked okay how do you get to this what are the what what would you say as things to remember one is keep it symol um sometime maybe to the point of stupid we actually make always keep it as simple as possible Until It Breaks right so there are a lot of things that my team wants to buy instrumentations so this experiment that we run we didn't you know spend three months trying to find the right framework to install another three months implementing it and then getting the right feature Fleck or whatever whatever that you do we just want and go ahead and do whatever we can with what we have that mentality of keeping it simple has been ingrained in our team for a decade and then staying lean zero to one Simplicity is hard to maintain as the company grows as the revenue grow and I want to make sure that we don't fall into the Trap of more people hiring more people mean they can build more things or buildings faster I think we have a lot of engineering Founders here do you guys remember the book called mythical Amendment yep and it's a OG you know old engineering principle book what they're saying is just because you add more people doesn't mean you get things done faster because of the communication overhead and square between the people you actually slow down so we treat our employees really well we have a very high expectation for their performance so we kind of run like a elite squat model right we have only had one voluntary departure in the last five years and what's the typical team size would you guess for a company with 8 million AR anybody want to take if you guys are about there how was your head count we have 19 people what 25 30 we're 19 people and this is where are we okay and then one question for the founders is anytime I get confused or not clear or need alignment with people what's the point of this we have empowered everybody on our team to ask this question blent to the point what's the point of this if basically if your manager ask you to do something and you don't know why why you're doing it they are empowered to ask what's the point of this if I'm as a CEO I'm not explaining things I'm not explaining why things are being done they are empowered to ask me what's the point of this and that's a very simple thing that you can kind of crystallize why you're doing the thing that you're doing so what's the point of again what's the point of running a company this way we are not the most flashy high growth crazy startups that are you know just crushing it right there is an upside to running it this way owning your destiny I think Nathan was talking about this valuation is temporary control is forever and that's what you get you control your destiny and I I want to ask for Founders and investors how do you get pay when do you get pay what are the paths Venture what would you say four paths right one you sell the company you get paid investor get paid two you go IPO your stock is now liquid and you get paid secondaries and you can issue dividends that's because so for the first three ways you are giving up your stocks right there is the ownership transfer of a piece of your company giving to somebody in exchange for the money but when you issue dividend you actually still own the same same company the same amount but you do get paid so we have issued dividends for all our shareholders employees investors Founders so employees actually uh the investors have been actually making 5x return on their investment and for because of that they're pretty happy so we've been able to build schools in Burma I have actually grown up in Burma I went to college with a scholarship so we are paying it forward we take our teams to The French Laundry and that's that's what Nathan wants me to put the picture there so to wrap it up I want to say all the founders Builders out there there is a path that you can build things that you love at a pace that you're comfortable with and there are people telling you that that's not possible so try to keep that in mind [Applause] that was great